Contact's initial drilling program tested new technologies and provided a great deal of new information that Contact will use to further exploit the old Stoney Creek field. Contact has completely remapped the entire oil reservoir and is confident that the field can be economically developed using the information gathered during our initial exploration phase. An independent reserve evaluation is being prepared to confirm our findings.
Short-term production tests indicate initial production of 25bopd per well however we believe that flow rates of 50bopd should be achievable using conventional, lower cost technology in the high pressure side of the reservoir.
Final approvals to commence production from the second Stoney Creek horizontal well I-88 and the first reworked vertical well are expected by June 15, 2007. Production from these wells will commence immediately following the receipt of final approvals.
The first horizontal well, A-89 encountered good reservoir rock, however, was in the low-pressure side of the reservoir. The I-88 well encountered the higher pressure side of the reservoir however did not encounter the best part of the reservoir rock. Although we are disappointed with the expected initial production rates, we are encouraged with what appears to be low decline rates and a much lower pour-point of the oil which means we will be able to use much lower cost drilling, completion and production procedures to exploit the field.
Our initial work on the Stoney Creek Field has been more time and resource consuming than expected and we have yet to achieve the kind of production volumes that we believe are possible however we are confident that we will now be able to generate significant economic production with what we have learned.
Contact is now preparing for an extensive drill program at South Stoney Creek to begin this summer. As announced November 10 2006, the company has identified additional Stoney Creek "look-alike" features with multiple target horizons from its seismic program last year. Further details on this program will be released closer to the start of drilling.
Contact Exploration Inc. is a junior exploration company with a focus on Canadian East Coast onshore exploration. Contact's land claims and holdings are located in close proximity to the largest consumption markets in North American with pipeline and refinery infrastructure in place.
Contact has interests in approximately 1.5 million acres onshore Nova Scotia, approximately 160,000 acres onshore West Newfoundland and 165,000 acres onshore New Brunswick, which includes the Stoney Creek Field.
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